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Issues As Legislators Make Fresh Push For Ajaokuta Steel Completion

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Recently, the House of Representatives, having halted the concessioning move of the federal government, passed a bill asking the government to spend $1billion (N360billion) from the Excess Crude Account to complete the Ajaokuta Steel Company (ASC) amidst fears in some quarters that when signed into law, the fund may go down the drain as those dolled out before now without results. ABAH ADAH writes.

Almost four decades after the project was launched with the unbeatable objective of making the country an industrial cum economic hub, the Ajaokuta Steel Company Limited (ASCL) has failed to take off till date, despite the billions of dollar sunk into it, and Nigeria is still on her long windy walk to self-sufficiency in steel development.
Having discovered from geological surveys carried out by foreign experts that Nigeria has deposits of raw materials suitable for iron and steel production the federal government established the Nigerian Steel Development Authority (NSDA) in 1971 through Decree No. 19 in order to advance the development of the Nigerian steel industry. NSDA carried out detailed market studies and investigations on local availability of raw materials. The Preliminary Project Report (PPR) of 1974, the Detailed Project Report (DPR) of 1977 and the Global Contract (1979) for construction of steel plant at Ajaokuta were all commissioned and executed during the NSDA period.

The NSDA was thereafter dissolved through decree No. 60 on the 18th of September 1979. This decree also created Ajaokuta Steel Company Limited, ASCL being the successor of NSDA.
According to its original design, the steel plant was to produce 1.3 million tonnes of liquid steel per annum in its phase one, with a built-in capacity to expand its production to 2.6 million tonnes of flat iron and steel products in its second phase and phase three plan was planned to produce 5.2 million tonnes of various types of steel products, including heavy plates.
It has highly sophisticated assemblage of 43 different plants made up of a web of complex iron, cable and machinery of different sizes and functions.
Out of the 43 plants, LEADERSHIP learnt that 40 had already been completed.
Considering its strategic importance to the country’s life, huge sums of money have been voted or appropriated for the cause by the various governments that have come and gone over the years, without achieving the expected successful completion till date. Yet the “justifying” excuses have been primarily inadequate fund. At some points, contracts were revoked, at others, they were revived, thus leading to the crossroads at which the long staunted project now finds itself that has brought about the thinking that “the industrial bedrock” be concessioned with the believe that it will fare better under private management.
The worst happened in 1994 when the military junta led by General Ibrahim Babangida stopped the work entirely and sacked the Russian contractors, the TPE. By then the plant was said to have attained 98 per cent completion rate.

The Vision 20:2020 economic blueprint document even goes beyond the rolling plant to envisage the actualisation of the third phase of the project, the 5.2-million-metric-tonne/per annum of liquid steel production.
The plan takes into cognisance, the technical audits of the plant conducted by two reputable international firms in 2000 and 2010, Messrs TPE (original builders of the plant) and Messrs REPROM, respectively.
Based on the TPE audit, a work schedule spanning 24-month duration and involving the injection of about $400m is the chief feature of the rolling plan.
Rather than go through the process of completing the plant, the federal government under Obasanjo in 2003, gave the rehabilitation and management of the ASCL to an American firm, Solgas, as concession in a controversial transaction.
When it was clear that the company neither had the technical requirement nor the financial muscle to manage the steel complex, the concession was terminated and the complex was turned over to an Indian firm, Global Holding Infrastructure Limited, to manage for a period of 10 years.
Again, the concession crashed three years after as the federal government under the late President Umaru Yar’Adua , terminated the agreement in 2008, accusing the Indian firm of asset-stripping.

This prompted the concessionaire to head for arbitration at the International Court of Arbitration in London. The case lingered until August 2016 , when the federal government reached an out-of-court settlement with the Indian firm.
Under the agreement, Global Infrastructure Holding Limited would operate the National Iron Ore Mining Company Limited for a period of seven years as a settlement for renouncing any claim on the ASCL.
Recently, the Minister of Mines and Steel Development, Dr Kayode Fayemi, who has been seen as firm in his stand, said that concession of ASC was the way forward even as the lawmakers objected to that, insisting that the federal government had sunk over $8billion into the project since 1979 without result, adding that no fewer than 14 organisations from different countries had since 2016, indicated interest in the Ajaokuta Steel Complex.
Steel experts have said the plant has the capacity to generate $1.7 billion annually, which implies that the $1billion needed to complete it can be generated in the less than one year of its operation and it would save the nation huge sums of foreign exchange on steel importation. It has also been said that the country currently spends over $3 billion annually on steel importation.
In five years alone (2012-2016), Nigeria imported steel worth N2.215 trillion, according to the Bureau of Statistics.
To show how serious the House was on its resolve to stand in the way of any further move to concession the company, the Green Chamber also amended the National Council on Commercialisation and Privatisation, NCPC Act, by removing the steel complex from the list of public firms that can be privatised or commercialised.
In his response to the anti-concession move of the lawmakers, the minister explained in part, “We have also said to them that we are not going to repeat the mistake of the Obasanjo administration. We will not undertake the re-concession without one, a technical audit; two, a transaction advisory service that will look into all these and advise us accordingly as to who really has the technical capacity, the financial wherewithal and the track record to really bring Ajaokuta back to life.

“However, the government took a principled position on one thing: that Nigeria will not spend one dollar on the so-called completion of the Ajaokuta steel plant. The reason for that is very simple; today from our record, we have spent close to $8bn since 1979 when this process started and we have not seen the result.”
The minister argued that the government and the House of Representatives agreed on the concession of the plant and that the House approved the sum of N2billon for the purpose in 2017, hence he wondered why the U-turn and “vitriolic attack”.
The House had earlier passed a vote of no confidence in Fayemi and the Minister of State for Mines and Steel Development, Alhaji Abubakar Bwari, following their failure to appear before it for sectoral debate on the steel plant.
The lawmakers also instructed the ministers to suspend every step towards the concession of the plant, adding that they preferred that the government should invest and complete the project.
Justifying his position further, Fayemi said, “Ajaokuta is an inherited challenge. The Chief Olusegun Obasanjo administration gave it out on concession; the President Umaru Yar’Adua government revoked it. And the case went to the London Court of Arbitration. Its resolution in 2016 led to the signing of the Modified NIOMCO Agreement, which ceded the complex back to the federal government and NIOMCO to Global Steel.
“No fewer than 14 parties have shown interest in running the complex, but government’s position is that we would not do any concession without a technical audit.

“PricewaterhouseCoopers was engaged to do a review of the company’s indebtedness and statutory liabilities as part of the settlement agreement.
“The National Assembly appropriated N2,096,500,000 for Ajaokuta concession in the 2017 Appropriation Act duly passed into law. We are just commencing what was passed into law by the National Assembly.”
With all these put together, no right thinking person can be in doubt that even the Ajaokuta Steel Complex itself is already confused and hopeless such that if it were human, it would opt for deconceptualisation.
What the Nigerian people, and indeed the economy needs is not who owns and manage the company, but how it works, to impart their lives.



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